Video game company Activision Blizzard accused streaming giant Netflix of showing "contempt" for state employment law by poaching the former company's CFO, Spencer Neumann, in 2018, a lawsuit obtained by Variety shows.
The suit, filed Dec. 4, alleges intentional interference with a contract, unfair competition, and aiding and abetting breach of fiduciary duty. This is the third time Netflix has been sued for allegedly hiring employees enmeshed in fixed-term agreements. The first two suits were filed by Fox and Viacom.
In this latest case, Activision alleges Netflix hired away Neumann when he was about halfway through a three-year contract as CFO at Activision. Netflix "has a pattern and practice of unlawfully inducing employees of other competitors to breach their fixed-term contracts," Activision alleged.
"Netflix has demonstrated a pattern of caring only about attracting and employing whoever Netflix wants, regardless of whether it violates the law along the way," Activision's lawyers wrote. "Netflix's unlawful conduct is not trailblazing or innovative — it is just reflective of Netflix's contempt for the law of the State of California."
The suit notes Netflix has been moving into the video game market since at least 2017, which puts it in direct competition with Activision, the game publisher behind Candy Crush Saga and World of Warcraft.
Neumann signed a three-year deal to work as Activision's CFO in May 2017. According to the lawsuit, in 2018, when the two companies negotiated distribution deals for Activision's linear contact, Netflix began courting Neumann.
Activision terminated Neumann's contract for violating legal obligations to the company in January 2019, leading him to move to Netflix as CFO that same month.
Activision also alleges Netflix knew Neumann would be in breach of his contract for moving over, and, as such, offered to cover any costs associated with the fallout.
"Netflix intentionally and substantially induced, assisted, and encouraged Neumann to breach his fiduciary duties by recruiting him and offering him employment with Netflix and agreeing to indemnify Neumann for any claims against him arising from his breach of the Neumann Agreement and/or his fiduciary duties," Activision's lawyers wrote.
Netflix co-CEO Reed Hastings was also personally involved in the maneuver, the suit alleges, "evidencing that Netflix's tortious and unethical conduct is intentional and a directive ‘from the top.'"
Alongside punitive damages, Activision is seeking a permanent injunction in a California court that would force Netflix to stop its practice of tapping up employees who are in the midst of fixed-term contracts, Television Business International reported.
Prior to Activision, Neumann spent several years at the Walt Disney Company, including five years as its CFO of global guest experience at Disney's Parks and Resorts division.
In the Fox case, Netflix argued Fox's employment contracts were unenforceable in that they wrongfully locked employees into long-term deals, Variety reported. Fox won the case, and Netflix was ordered not to poach additional employees, which it has appealed.
Viacom's case alleging similar interference remains pending.